N.J. Admin. Code § 18:24-10.4

Current through Register Vol. 56, No. 11, June 3, 2024

Section 18:24-10.4 - Acceptance of exemption certificates

(a) For transactions entered into prior to October 1, 2005, an exemption certificate is properly accepted if the following conditions are met:

1. An exemption certificate to be accepted in good faith must contain no statement or entry, which the seller knows is false or misleading;

2. A seller is presumed to be familiar with the laws and rules regarding the business in which he or she deals;

3. In general, a seller who accepts a properly completed exemption certificate in good faith is relieved of liability for collection or payment of tax upon transactions covered by the certificate. The question of good faith is one of fact and depends upon a consideration of all the conditions surrounding the transaction;

4. The certificate must be in the physical possession of the seller, and available for appropriate inspection on or before the 90th day following the date of the transaction to which the certificate relates; and

5. Where a certificate is not made available for inspection on or before the date in (a)4 above, the seller must provide to the satisfaction of the Director, by means of evidence other than certification of the purchases, that the sale in question is, in fact, exempt.

(b) For transactions entered into between October 1, 2005 and December 31, 2007, an exemption certificate is properly accepted and the seller is held harmless if the following conditions are met:

1. The certificate must contain no statement or entry, which the seller knows is false or misleading;

2. The certificate must be an official form or a proper and substantive reproduction, including electronic;

3. The certificate must be filled out completely;

4. The certificate must be dated and include the purchaser's New Jersey tax identification number or, for a purchaser that is not registered in New Jersey, the Federal employer identification number or out-of-State registration number. Individual purchasers must include their driver's license number; and

5. The certificate or required data must be provided within 90 days of the sale.

(c) For transactions entered into on and after January 1, 2008, an exemption certificate is properly accepted and the seller is held harmless when a purchaser claims an exemption if the certificate is fully completed.

1. The following information must be obtained from a purchaser in order for the exemption certificate to be "fully completed":

i. The purchaser's name and address;

ii. The type of business;

iii. The reasons(s) for the exemption;

iv. The purchaser's New Jersey tax identification number or, for a purchaser that is not registered in New Jersey, the Federal employer identification number or out-of-State registration number. Individual purchasers must include their driver's license number; and

v. The signature of the purchaser, if a paper exemption certificate is used, including facsimile.

2. The seller's name and address are not required and are not considered when determining if an exemption certificate is fully completed. A seller that enters data elements from a paper exemption certificate into an electronic format is not required to retain the paper exemption certificate.

(d) If the seller either has not obtained an exemption certificate, has obtained an incomplete exemption certificate, or the seller has not obtained the relevant data elements as provided in (c)1 above, then the standard is different from that which applies at the point of sale as described in (c)1 above. The seller shall have at least 120 days after the Division's request for substantiation of the claimed exemption to do the following:

1. From January 1, 2008 to September 30, 2011, obtain a fully completed exemption certificate from the purchaser, taken in good faith, which means that the seller is presumed to be familiar with the laws and rules regarding the business in which he or she deals and the exemption certificate must not contain any statement or entry that the seller knows is false or misleading; or

2. On and after October 1, 2011, either:

i. Obtain a fully completed exemption certificate from the purchaser, taken in good faith, which means that the seller obtains a certificate that claims an exemption that:

(1) Was statutorily available on the date of the transaction in the jurisdiction where the transaction is sourced;

(2) Could be applicable to the item being purchased; and

(3) Is reasonable for the purchaser's type of business; or

ii. Obtain other information establishing that the transaction was not subject to the tax.

(e) If the seller obtains the information described in (d) above, the Division shall relieve the seller of any liability for the tax on the transaction, unless it is discovered through the audit process that the seller had knowledge or had reason to know, at the time such information was provided, that the information relating to the exemption claimed was materially false or the seller otherwise knowingly participated in activity intended to purposefully evade the tax that is properly due on the transaction. The Division must establish that the seller had knowledge or had reason to know, at the time the information was provided, that the information was materially false.

N.J. Admin. Code § 18:24-10.4

Amended by 48 N.J.R. 824(a), effective 5/16/2016